If you spend your days working with timber, you’re probably well aware that the cost of materials has gone through the roof in recent times. In fact, reporting from industry specialist Random Lengths has found that softwood lumber prices are 112% higher than one year ago.
For field service operators like home builders and carpenters who need to purchase vast quantities of timber to service their clients effectively, this rapid increase in prices means they have to dramatically reduce profit or find customers willing to take on the extra cost.
But what has led to these skyrocketing prices? With COVID-19 at the heart of this recent hike in costs, we delve a little deeper into this incredibly challenging industry event to help field service operators navigate this tough time.
Like most things in life, COVID-19 has significantly impacted the lumber industry. As the pandemic gave rise to concerning talks regarding lockdowns and social distancing rules, many leading lumber yards expected demand from customers to drop dramatically. However, the opposite turned out to be true, as countless people stuck at home decided it was the perfect time to kickstart their long-awaited DIY project.
Alongside this downturn in supply and increase in hobbyists buying up materials, the housing market hardly took a dip. This has largely been considered the result of remarkably low interest rates, which boosted demand for housing and incentivized builders to continue working through the pandemic. When you combine all these factors together, it's not hard to understand how timber prices have soared upwards.
If you’re not involved directly in the building industry, you might be wondering about how bad things have gotten. Well, the National Association of Home Builders has recently estimated that the current price of lumber has added a minimum of $24,000 to the cost of a newly built single-family home – an additional cost that many builders just can’t tolerate.
Tariffs, Wildfires, and COVID-19
When it comes to lumber production in 2020, there has been an almost unprecedented amount of disruption. However, these problems actually began back in 2017, when the United States had a trade dispute with Canada that led to tariffs of more than 20% being applied to imported softwood lumber. Considering America’s northern neighbor has historically supplied over 80% of imported timber, many believe this levy lit the match on the current pricing crisis.
Another major issue that happened to coincide with the pandemic was a series of savage wildfires. With Oregon accounting for about 16% of total US softwood lumber production, the worst fires in around 100 years destroyed more than a million acres of precious forestland. With rough estimates suggesting this loss of materials equals what is needed to build a million homes, this severe break in the supply chain guaranteed massive price increases.
Alongside these damaging tariffs and raging wildfires, COVID-19 is likely the worst contributor to the current situation. Lumber yards across the country encountered a range of coronavirus-related concerns, ranging from forced shutdowns to numerous permanent closures. Meanwhile, many workers have tested positive for COVID-19 leading to entire teams needing to isolate themselves at home.
Although new pandemic-related safety protocols were undoubtedly necessary, it’s not surprising that productivity was negatively impacted. With many lumber yards slowing down production to protect workers and to respond to the lower demand that was predicted, many mills were severely caught out by the increased amount of business.
What Does This Mean for You?
Although there is still plenty of desire to build homes, builders and carpenters are struggling to find the right materials at the right price. As the surge in home projects saw pressure-treated wood bought up across the country, customers quickly turned to other materials like composite timber. The knock-on effect has led many tradespeople to simply stop building until the supply chain has caught up to demand and reduced prices.
Fortunately, some industry experts say lumber mills are starting to ramp back up. With the number of COVID-19 cases significantly lower compared to the height of the pandemic, it’s expected that production and distribution issues will gradually return to something within the realm of normality. As increased supply should help lower prices, field service operators impacted by these recent developments can hopefully get back to doing what they do best.
To streamline the rest of your operation, FieldPulse can help you take charge. Our robust business management app makes it easy to keep track of client information, schedule projects, process invoices, and much more. With more time to take care of the things that really matter, your field service business can reach the next level. Schedule a free demo and discover how FieldPulse will help your company grow.